1 Market-Beating Auto Stock Up 746% in the Past 10 Years That Warren Buffett Would Agree Is a Compounder (Hint: It's Not Tesla)

Warren Buffett made his career as head of Berkshire Hathaway largely by finding businesses that he could own forever. Holding shares of companies that can increase revenue and profits in a steady fashion, known as compounders, can lead to tremendous long-term results. Individual investors should try to incorporate this philosophy into their portfolio strategies.

Buffett was never very fond of automotive stocks. But there's one carmaker whose shares have risen 746% during the past decade (as of Aug. 12) that might convince him that an attractive investment candidate can be found even in a difficult industry.

What market-beating stock am I referring to? To be clear, it's not Tesla (NASDAQ: TSLA), though you surely know its name.

Image source: The Motley Fool.

Tesla's auto segment is unpredictable

During the 2026 second quarter, Tesla reported a 23% year-over-year jump in automotive revenue. Its electric vehicle (EV) deliveries rose 25%.

On the surface, these are great numbers. However, higher gas prices probably helped to boost the results, and that may not last.

And since hitting a peak in 2023, Tesla's auto revenue has failed to report consistent growth. Its gross margin has also been hurt by lower average selling prices.

The business is heavily exposed to macroeconomic conditions, primarily elevated interest rates. This can make buying cars more expensive for consumers.

Competition is also fierce in the EV market. Tesla is no longer the only manufacturer of these plug-in battery-powered cars. Legacy automakers have their own offerings. And foreign companies, especially those in China, also sell compelling EV models.

Ferrari's latest financial results beat estimates

Ferrari (NYSE: RACE) is immune to many of those same variables, macro pressures, and competitive forces that hurt Tesla and other mass-market auto businesses. Its operations are unique, as it behaves more like a luxury goods purveyor than a car manufacturer. Buffett would appreciate this setup, which runs counter to the natural cyclicality of the auto industry.

In Q2, Ferrari reported revenue of 1.9 billion euros ($2.2 billion), up 8.4% year over year. It also posted 2.62 euros in diluted earnings per share, 10% higher than the second quarter of 2025. These headline figures beat Wall Street expectations.

The company shipped 3.7% fewer cars in Q2 than it did in the year-ago period. But this didn't prevent operating income from rising 9.5%.

Ferrari's latest results were driven by higher-than-anticipated personalizations, as customers spend more money to tailor every detail of their cars. For the business, this trend can bolster incremental high-margin revenue. And it further differentiates Ferrari from the rest of the industry.

Meeting Buffett's requirements

There are three obvious reasons Ferrari would pass Warren Buffett's quality screen.

The presence of a wide economic moat is the first factor. Ferrari has arguably the strongest brand in the auto industry and one of the most recognizable names in any sector. This intangible asset is supported by management's relentless focus on keeping supply tight, which aids the exclusivity, prestige, and status that come with owning one of these supercars.

There is proven pricing power. These expensive vehicles are Veblen goods, meaning that demand for them could actually increase if the price tag goes up. The target demographic, customers who probably have at least a seven-figure net worth, view these cars not as utility products but mostly as collector's items.

Ferrari vehicles can cost hundreds of thousands of dollars at the low end. There are special editions, like the F80 released in 2024, that carried a sticker price of $3.7 million.

And lastly, as alluded to already, Ferrari's financial performance has been impressive throughout its history. Its operating margin during the past decade averaged a phenomenal 25.2%, a level that's surely the envy of the rest of the industry. And the financial gains are steady and predictable, as this is a recession-resilient business.

Individual investors should consider buying shares of Ferrari today.

Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway, Ferrari, and Tesla. The Motley Fool has a disclosure policy.